Today the heads of France and Germany willmeet to discuss plans to tackle the ongoing euro debt crisis. The European Finance Stabilization Fund and its size will likely to be discussed, with Germany so far unwilling to increase its size. Other possible topics will likely include the issuing of eurobonds which the Chancellor of the UK have been calling for.
The bonds willeffectively share the debt burden of Greece,Portugal and Ireland. So far the ECB has stepped in to contain costs of Italy’s and Spain’s borrowing by buying up their bonds.
The ECB President Trichet says this is only a temporary measure and wants and wants a political solution including increasing the size of the EFSF and the formation of a Euro wid Finance ministry to coordinate fiscal matters.
Thus far the EU has been lurching from crisis to crisis with bailouts to 3 countries so far. With investors targeting Italy and Spain the ECB had to intervene and buy up Spanish and Italian bonds.
There are fears that the EFSF will need to be increased in order to deal with any possible ailout of Italy and Spain but this measure will have to be approved by the 17 member Eurozone. TheTtory eurosceptics fear that as fiscal union is entrenched the UK will lose sovereignty over tax and budgetary measures.
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